IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v11y2023i18p3994-d1243840.html
   My bibliography  Save this article

An Analytic Network Process to Support Financial Decision-Making in the Context of Behavioural Finance

Author

Listed:
  • Roberta Martino

    (Department of Mathematics and Physics, University of Campania Luigi Vanvitelli, Viale A. Lincoln, 5, 81100 Caserta, Italy)

  • Viviana Ventre

    (Department of Mathematics and Physics, University of Campania Luigi Vanvitelli, Viale A. Lincoln, 5, 81100 Caserta, Italy)

Abstract

Following the financial crisis of the last decade and the increasing complexity of financial products, the European Union has introduced investor protection tools that require professionals to carry out a client profiling process. The aim is to offer products that are in line with the characteristics of the individual. The classes of variables for comprehensive profiling are obtained by matching the elements proposed by the Markets in Financial Instruments Directive and studies of classical finance. However, behavioural finance studies, which emphasise the importance of behavioural attitudes, are not clearly considered in this structured profiling. The present paper discusses the implementation of an analytic network process to support financial decision-making in a behavioural context, combining regulatory guidance and qualitative and quantitative evidence from the literature. The Kersey Temperament Model is used as the behavioural model to construct the network cluster that incorporates personality into the valuation. Uncertainty management is incorporated through recent studies in the context of intertemporal choice theory. The functionality of the network is verified through a case study, where two alternatives with different characteristics are considered to meet the same investment objective. The present approach proves how the generated structure can provide strong support for financial decision-making.

Suggested Citation

  • Roberta Martino & Viviana Ventre, 2023. "An Analytic Network Process to Support Financial Decision-Making in the Context of Behavioural Finance," Mathematics, MDPI, vol. 11(18), pages 1-30, September.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:18:p:3994-:d:1243840
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/11/18/3994/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/11/18/3994/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Viviana Ventre & Roberta Martino, 2022. "Quantification of Aversion to Uncertainty in Intertemporal Choice through Subjective Perception of Time," Mathematics, MDPI, vol. 10(22), pages 1-16, November.
    2. repec:eme:mfppss:v:36:y:2010:i:6:p:474-481 is not listed on IDEAS
    3. Robert J. Shiller, 2003. "From Efficient Markets Theory to Behavioral Finance," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 83-104, Winter.
    4. Anderson, Evan W. & Ghysels, Eric & Juergens, Jennifer L., 2009. "The impact of risk and uncertainty on expected returns," Journal of Financial Economics, Elsevier, vol. 94(2), pages 233-263, November.
    5. Thomas L. Saaty & Luis G. Vargas, 2013. "Decision Making with the Analytic Network Process," International Series in Operations Research and Management Science, Springer, edition 2, number 978-1-4614-7279-7, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rui Ding & Zehua Liu, 2024. "An IT2FS-ANP- and IT2FS-CM-Based Approach for Conducting Safety Risk Assessments of Nuclear Power Plant Building Projects," Mathematics, MDPI, vol. 12(7), pages 1-20, March.
    2. Annamaria Porreca & Viviana Ventre & Roberta Martino & Salvador Cruz Rambaud & Fabrizio Maturo, 2024. "Functional Clustering of Discount Functions for Behavioral Investor Profiling," Papers 2410.16307, arXiv.org.
    3. Kyriaki Tsilika, 2024. "A Mathematica-Based Interface for the Exploration of Inter- and Intra-Regional Financial Flows," Mathematics, MDPI, vol. 12(6), pages 1-15, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. R. Andergassen, 2003. "Rational destabilising speculation and the riding of bubbles," Working Papers 475, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Gu, Chen & Kurov, Alexander & Wolfe, Marketa Halova, 2018. "Relief Rallies after FOMC Announcements as a Resolution of Uncertainty," Journal of Empirical Finance, Elsevier, vol. 49(C), pages 1-18.
    3. Florian Meier, 2020. "The Age of Cheap Money and Passive Investing: Are Pro Forma Earnings Value Relevant?," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 9(2), pages 1-1.
    4. Aït-Youcef, Camille & Joëts, Marc, 2024. "The role of index traders in the financialization of commodity markets: A behavioral finance approach," Energy Economics, Elsevier, vol. 136(C).
    5. Constantinos Antoniou & John A. Doukas & Avanidhar Subrahmanyam, 2016. "Investor Sentiment, Beta, and the Cost of Equity Capital," Management Science, INFORMS, vol. 62(2), pages 347-367, February.
    6. Robert J. Shiller, 2007. "Understanding recent trends in house prices and homeownership," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 89-123.
    7. Zabolotnyy, Serihiy & Wasilewski, Mirosław, 2018. "Operating and financial leverage as risk measures in agricultural companies," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 276377, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    8. Kubin, Ingrid & Zörner, Thomas O. & Gardini, Laura & Commendatore, Pasquale, 2019. "A credit cycle model with market sentiments," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 159-174.
    9. Rachele Corticelli & Margherita Pazzini & Cecilia Mazzoli & Claudio Lantieri & Annarita Ferrante & Valeria Vignali, 2022. "Urban Regeneration and Soft Mobility: The Case Study of the Rimini Canal Port in Italy," Sustainability, MDPI, vol. 14(21), pages 1-27, November.
    10. Thomas Delcey, 2019. "Samuelson vs Fama on the Efficient Market Hypothesis: The Point of View of Expertise [Samuelson vs Fama sur l’efficience informationnelle des marchés financiers : le point de vue de l’expertise]," Post-Print hal-01618347, HAL.
    11. Ariane Szafarz, 2015. "Market Efficiency and Crises:Don’t Throw the Baby out with the Bathwater," Bankers, Markets & Investors, ESKA Publishing, issue 139, pages 20-26, November-.
    12. Paul Welfens, 2014. "Issues of modern macroeconomics: new post-crisis perspectives on the world economy," International Economics and Economic Policy, Springer, vol. 11(4), pages 481-527, December.
    13. David Staš & Radim Lenort & Pavel Wicher & David Holman, 2015. "Green Transport Balanced Scorecard Model with Analytic Network Process Support," Sustainability, MDPI, vol. 7(11), pages 1-19, November.
    14. Vassilios Babalos & Mehmet Balcilar & Rangan Gupta, 2014. "Revisiting Herding Behavior in REITs: A Regime-Switching Approach," Working Papers 201448, University of Pretoria, Department of Economics.
    15. Mohamed KHALED, 2018. "apport du biais d’excès de confiance à l’explication de la volatilité des rendements du marché des actions algérien," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(2), pages 36-46, December.
    16. Salois, Matthew & Moss, Charles, 2010. "An Information Approach to the Dynamics in Farm Income: Implications for Farmland Markets," MPRA Paper 26850, University Library of Munich, Germany.
    17. John Sabelhaus, 2005. "Alternative Methods for Projecting Equity Returns: Implications for Evaluating Social Security Reform Proposals," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 8(1), pages 43-63, March.
    18. Queirós, Francisco, 2024. "Asset bubbles and product market competition," Theoretical Economics, Econometric Society, vol. 19(1), January.
    19. Corgnet, Brice & Hernán-González, Roberto & Kujal, Praveen, 2020. "On booms that never bust: Ambiguity in experimental asset markets with bubbles," Journal of Economic Dynamics and Control, Elsevier, vol. 110(C).
    20. Bellonia Antonella & Passaretti Tommaso & Visconti Raffaele, 2013. "Seasonality in Equity Rising on Stock Markets. Windows of Opportunity? Empirical Evidence from China, India, Brazil and South Africa," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(4), pages 1-1, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:11:y:2023:i:18:p:3994-:d:1243840. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.